Economy has added 30,800 jobs since hitting bottom in 2009 and enjoyed 12 consecutive quarters of rising taxable sales across nearly every industry
A new forecast focused on the U.S., California, and the Riverside/San Bernardino economies says growth at the national level is likely to start accelerating, in part due to the growing, positive impact of a rebounding housing market.
The forecast, authored by Beacon Economics and released in partnership with the University of California, Riverside’s School of Business Administration as part of the 2012 Riverside/San Bernardino Economic Forecast Conference, reports that home values are 5 percent to 6 percent higher than they were at this time last year, and new housing construction starts have continued to rise, reaching 900,000 in October. Additionally, the length of time that existing homes are up for sale has dropped to well below six months, evidence of a tight market, according to the analysis.
“Both home prices and construction permits have trended into recovery territory and we expect the housing sector to continue to add to overall economic growth,” says Beacon Economics’ founding partner and one of the forecast’s lead authors Christopher Thornberg. He warns however that improvement in the market will continue to be slow despite tight supply. “There are forces working to decelerate the recovery, including a lack of equity that prevents much of the ‘move-up’ market; we don’t expect housing to accelerate explosively, but instead – like overall economic growth – to expand slowly.”
The forecast also points to California as being one of the driving forces behind the nation’s broader recovery. In 2012, California led the U.S. in job, income, and consumer spending growth, according to the analysis. And while the recovery in Riverside/San Bernardino has been slower out of the gate than in the nation or state, the local economy has made significant progress including adding back 30,800 jobs since hitting bottom in 2009 and enjoying 12 consecutive quarters of rising taxable sales across nearly every industry in the region.
Yunzeng Wang, interim dean of the School of Business Administration, says that the resilience and the future course of the region’s economy is illustrated by the broad-based nature of the regional recovery. “The broad recovery includes industries ranging from construction to hospitality, which illustrates the inland region’s progression towards a more diversified economy,” said Wang.
This is the third year the School of Business Administration, the only research-based business school in Inland Southern California, has partnered with Beacon Economics to release an economic forecast.
Key U.S., California, and Riverside/San Bernardino findings from the forecast include:
* Riverside/San Bernardino Counties: Inland Southern California is pulling ahead of the pack in terms of growth in home prices and new residential and nonresidential construction. Rising employment, affordability, and low interest rates are all helping to escalate activity in the local economy – and growth is expected to increase in 2013.
* Riverside/San Bernardino Counties: The region’s hotels and restaurants are starting to thrive again, with sales tax receipts at restaurants and hotels across Riverside-San Bernardino up by nearly 9 percent on a year-to-date basis – the third-fastest rate of growth by spending category in the state.
* California: A total of almost 78,000 jobs were created in California in September and October of 2012. Employment growth in the state is forecast to average roughly 2 percent during the remainder of 2012 and into 2013, before picking up steam and growing by between 2.5 percent and 3 percent per year from 2015 through 2017.
* California: While exports have continued to increase in 2012, export growth in the state has slowed from the double-digit increases experienced in 2010 and 2011.
* United States: On January 1st the United States will see a sharp increase in taxes and a large decline in federal spending if the two parties cannot agree on a budget compromise. The overall shock to the system amounts to roughly $550 billion, or $410 in tax increases and $140 in spending cuts over the course of the year. The shock to the country will be substantial and recession causing – but only if this budget remains in place for a sustained period of time in 2013. In other words, it is more of a fiscal hill, where the effects start to roll slowly but pick up speed over time.
A copy of the 2012 Riverside/San Bernardino Economic Forecast Book can be downloaded in its entirety at: http://www.beaconecon.com/Misc/Print_IE.pdf.